Spot Silver surged to a new 14 1/2-year high of $48.94/oz. on Wednesday, as broader geopolitical and economic uncertainty coupled with expectations of more Federal Reserve interest rate cuts heightened the safe-haven allure of the metal.
The ongoing US government shutdown has delayed the release of essential macro data, which complicated assessments of the US economy’s state, as investors had to rely on secondary, non-government data prints.
Despite that, markets are pricing in about a 95% chance of a 25 basis point Fed rate cut in October and an 82% chance of another 25 bps cut in December.
Last week, Fed Governor Stephen Miran once again expressed support for an aggressive rate cut trajectory because of the impact of the Trump administration’s economic policies.
On the other hand, Kansas City Federal Reserve Bank President Jeff Schmid indicated he was disinclined to further rate cuts, stating the central bank should remain focused on the danger of too-high inflation.
Additionally, robust industrial demand continued to support Silver prices amid supply constraints. Silver is facing its fifth successive year of a structural market deficit, with output of 844 million ounces well short of demand.
The white metal plays a key role in solar energy, electronics and broader electrification efforts.
Spot Silver was last up 2.04% on the day to trade at $48.81 per troy ounce.
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